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Taxes

Zuora

Taxes

Prerequisite: To enable taxation, ensure Sold To Contacts of Customer Accounts have valid Country names and State/Province names if the country is the United States or Canada.

Zuora offers 4 primary solution routes for taxation, which are Zuora Taxation Model, Configurable Tax app, Direct Avalara Integration, and workaround options. The information on this page should help you decide which route to start with.

 

Zuora Taxation Module

Zuora Taxation Module (Zuora Tax) allows you to identify which charges within your product catalog are taxable, calculate taxes based on granular sold to address details, and specify which customers are tax exempt. With our taxation module, you have the ability to apply tax rates for addresses with matching performed at any level from country, state, county, city, zip, or a string value for the tax region. Additionally, Zuora Billing allows you to apply up to three independent taxes to a single charge, and each tax can have a type of Flat Fee or Percentage.

See Zuora Tax for more information.

Configurable Tax app 

The configurable Tax app (integration with third-party tax engines) connects you to the tax vendors that hold the up-to-date tax rate data for numerous sales tax jurisdictions globally and eliminates the need for manual updates. The Tax app has various integrations corresponding to different tax vendors.

See Configurable Tax app for information about purchasing, installing, and setting up a Configurable Tax app.

Direct Avalara integration

Zuora's Avalara integration makes it easy to calculate and report tax when you have nexus in multiple tax jurisdictions. If you want to have access to the feature, submit a request at Zuora Global Support.

Zuora is tightly integrated with the Avalara tax engine and can calculate real-time tax rates when performing billing operations in bill runs and API calls. See Avalara Integration for more information.

Workaround

Create a product rate plan charge for tax 

If you do not use Zuora Taxation Module or integrate with a third-party tax vendor may have taxes added to their product using a product rate plan charge created specifically for the tax amount. By doing this, the rate plan charge for tax gets added to the subscription as you would with regular charges.

Review these additional considerations before using this method:

  • You must calculate the tax amount when adding the charge to a subscription (whereas, when using one of the above 2 methods, taxes get automatically calculated upon invoice generation).
  • The tax charge is independent of your regular charges and thus any changes to the subscription for regular charges will not automatically update the tax charge.
  • If an end customer upgrades their subscription and there's an increased charge for that product, the tax also goes up and the tax amount must be amended in the subscription accordingly.

Create taxation items through the API

You can use the Taxation Items operations to manage taxation items for draft billing documents, including invoices, credit memos, and debit memos.

Additional resources on taxes